Thursday, April 30, 2015

Dream Homes on Real Terms

Designing For Reality

We all have our ideal home sketch tucked away somewhere, if only in our minds. If you find yourself driving around looking at vacant lots and touring new homes then maybe you are ready for the next step. Building your own home is challenging and fun. The first step is determining what you can afford. Some lenders or builders will push you to borrow the most you possibly can and convince you that you can afford an even bigger dream. In the construction world, that approach could easily backfire.

The cost of building your ideal home is really just the start. Until you have a full picture of the associated issues, including everything from topographic surveys and septic systems to permits and contingency budgets (oh yes) you would be wise to be a little more conservative--at least in the paper stage. Now that may sound a little odd coming from a lender. When you've been on both sides of the table, you know it might be nice to have a little left over to furnish your larger spaces and finish the driveway. Oh, and pay for the higher cost of cedar siding you didn't anticipate 9 months earlier. Don't be fooled into thinking a 'builder's quote' is all you have to budget must include all the design, permitting and planning costs.

Once you have a lot, plans, a builder and a detailed cost list of materials, things start getting pretty real. I once heard an architect say that on average, most homeowners go over budget by about 20%. Let that sink in.

Land and Site Issues
Do you have a lot? If your realtor is working with you to find a suitable lot, they are often a wealth of information. A knowledgeable local designer will be informed about issues in your area, but it's a good idea to visit your local planning department to check on building restrictions unique to your area before you select a lot.

Before your close on a lot, include a contingency period to allow you to investigate issues related to building on that particular site. Besides zoning restrictions and sanitation issues, most county or municipal building departments have a number of land use requirements that you will need come to grips with. For example, is the lot itself 'buildable'?

Many people pick up a nice cheap lot, usually steep or with other problems like wetlands, and later find out the expense to build on their bargain was anything but. In the Pacific Northwest, where about 80% of our land is a watershed, you can expect there to be very specific issues like mitigating the impervious surfaces of your roof and driveway. Fortunately, your local building and planning department is also a wealth of information, so get in the habit of treating them with great respect and life will be much happier.

Choosing a Design or Architect

Assuming you have land, let's say you are ready to design your home to suit your site. Where do you start? Do you like pouring over plan books? Standard house plans have a remarkable similarity in that many are designed for flat lots, so if you have a decent slope you will need to start with the actual contours of your site. Time for that topographic survey. Builders, bless them, like to build what they know how to build...and more often than not (don't quote me please) they are building a home to be as marketable as possible. It is the rare builder who uses top quality materials and fixtures throughout and puts decent lighting in the bathrooms.

At the other end of the spectrum are architects and home designers. Architects design homes based on your needs, your taste and your budget. A good architect can actually save you money and heartache in the long run because they have the skills and knowledge to build a far better home. Home designers are also a very good, less expensive option, but bear in mind you get what you pay for. A draftsman is seldom very sensitive to space design, energy and materials issues. They basically draw up what you ask them to draw. Ask for references before you commit. I highly recommend that you tour a home or two built by your prospective consultant and actually speak to the homeowners about how they like living there.

Once I was reviewing architects and the homeowner pointed out that a rather interesting low ceiling cove was an 'accident' which the architect drew incorrectly on the plans. Their builder improvised rather than calling the architect to clarify the plans. Another homeowner mentioned their house was 10% larger than they expected because the builder's plans were drawn to the wrong scale. I kid you not.

Considering that you will be happily engrossed in making thousands of decisions along the way, it could be a good idea to hire a home design consultant. There are many kinds of design services from kitchen specialists to interior designers who may help you through the course of the project. Of course, picking out cabinets and flooring may be just your style, but not everyone is able to make so many decisions about so many things at the precise moment they need to happen!

Landscape Early and Often
One very often overlooked area is your landscape. Most people think of 'landscaping' as the part that happens after the 'land scraping'. If you have chosen a lot with intact natural features like trees--perhaps you appreciate their value. Not only is protecting trees important but so is protecting the soil and other fauna. Soil structures take many millions of years to develop and one bulldozer can undo a lot of the viability of your soil in an instant. If you are interested in Low Impact Design then it's time to research appropriate methods in your locale. If you prefer to consider your site as something to be beaten into submission and flattened, you will find many people willing to help you do just that.

Consider your neighbors before you cut down every tree...including the birds and raccoons that live in them and help create the ambiance that lured you there in the first place. In fact, the best time to call in a landscape designer is before anyone sets foot on the land. A good landscape designer or landscape architect will work with you, your builder or architect in the kindest way possible to help your home and site work together. In fact, if I had my way, I would hire a landscape designer to help me pick my lot and brief the architect before picking up a pencil.

Doesn't all this sound like fun? I hope you will enjoy living in your new home as much as you enjoyed participating in it becoming a reality.

Wishing you every building sanity!

© 2015 susan templeton

Thursday, April 23, 2015

Flip your Fridge program - cool idea - literally!

Turn in that old cranky, drippy, energy-guzzler for a sleek quiet more modern version that will save you some cold hard cash:

  • Refrigerators 15 years or older use twice as much energy as a new ENERGY STAR refrigerator.
  • Consumers can save as much as $260-350 over the next five years and reduce their carbon footprint by 7,900 pounds when replacing an old refrigerator with a new ENERGY STAR certified model.
  • Recycling old refrigerators save energy, money and help protect the climate. Keeping all that old refrigerant and foam from getting into the environment could prevent an extra 10,000 pounds of greenhouse gas 
  • The average refrigerator aged 10 years or older contains more than 120 pounds of recyclable steel emissions
  • If all refrigerators sold in the US were ENERGY STAR cetified, the energy cost savings would grow to more than $400 million each year and 8 billion pounds of annual greenhouse gas emissions would be prevented. That is the equivalent to the emissions from 750,000 vehicles.   

Besides your new refrigerator will keep your food fresher with all those new climate control zones and look a lot nicer doing it...quieter too.  Some second hand appliance stores will come and take the beast off your hands. This is one splurge you can totally justify. 

Happy recycling!

2015 copyright susan templeton

Saturday, June 04, 2011

What's happening in the Housing Construction Industry these days? “One Time Close” Custom to the Rescue!

So what does a homeowner seeking a custom home do these days? You get your own financing and let your financing bank manage the process for maximum results!

OTC or Custom Perm is two step loan consisting of construction (term) and permanent financing (perm) combined into one transaction.

This allows you to reduce your expenses to one set of costs usually associated with two closings. Until recently, it was more common for your builder to obtain construction or interim financing to build the home and then market it. Since so many builders found they could not sell their homes in a declining market, very few builders are proceeding using this model as banks have been forced to reorient how they handle construction projects.

What about Spec Loans?
Spec loans are for Builders who are financing their own project to sell. During the housing crisis, many Spec Builders and Lenders got out of the business altogether. In this scenario, after the home is built, the Buyer gets their own permanent loan. The price you pay includes the builders profit and their cost of doing business while building your home.

While some builders will try to get this form of financing for 'their own home' most banks are also counting on the long term sale. Better for them and you to have a firm contract from the start and nail down the total project up front so there are no surprises. The great thing about building your own home is really having a hand in the design stage to final outcome and knowing the quality of construction from the ground up. Using the OTC (One Time Close) program, you first get qualified for financing for the total 'as built cost to build the home. We use your builder's budget to determine the final cost, including any acquisition land. The OTC loan is closed prior to the start of construction. 

Your permanent house payments will not begin until the construction is complete; most often you pay interest only during construction as the balance grows for works complete.

How does it work?
The loan is essentially a set aside of funds available while the house is being built. Your builder will receive construction 'draws' during the process upon monthly inspection of what is completed. This helps you and your builder stay on task. As the construction draws are taken, the balance grows.

Once the construction is complete and the loan is 100% funded, your permanent terms (which you established prior to starting) will convert to the Permanent or traditional mortgage. OTC or Custom Perm can really save homeowner during the building process if it is managed correctly. This also saves your builder from having to qualify for the loan and extend their own credit. Most banks prefer this process as you, the homeowner are carrying the risk long term.

Where can you get an OTC?
Find a specialist OTC custom perm lender or mortgage banker who handles these products and knows what they are doing. Any construction lender worth their salt will have a dedicated and highly experienced underwriting and construction management team to make sure you get the house you paid for!

Enjoy the journey!

2011 copyright susan templeton

Monday, September 21, 2009

It's EASY Going Green!

Earlier this year Congress extended solar and alternative energy tax credits to take a bite out of the bill of upgrading your home energy systems. In addition, the EEM or Energy Efficient Mortgage is the new rage among borrowers needing up to 5% of your home's value to make energy efficient improvements..*

Since when is energy from the sun considered 'alternative'? Isn't the sun our main method of heating the earth? Even primitive adobe housebuilders and cave dwellers knew which way to face their walls for maximum solar gain.

The new 'alternative energy' credits mean that our federal government is providing a $2,000 credit paid to the builder on new homes whose space heating and cooling energy consumption is 50% below the annual consumption a standard home.

Ask your accountant to research your rebates! Heck one guy I know has an entirely 'alternative' net zero home and it's not the first one he has built so these are not new ideas folks. They are ideas whose time has come when we are looking around at the folly of ripping minerals out of the earth at great expense so we can send ships full of the stuff spilling their way to some refinery so another train or truck can haul it and at the end we get to pay three times what it actually cost to produce. Perhaps the new transparency is finally arriving just in time to start making sense. Like about the time we can't afford our gas bills this winter...that would be a good time. If you are like many of us seeing 50% higher energy costs, this tax credit is the perfect tipping point: Alternative thinkers are no longer the oddballs...they are the ones with real jobs climbing on roofs installing new solar collectors taking advantage of our new found enthusiasm for doing the right thing!

Energy Audits: If you plan to install a solar photo voltaic energy system, better windows, upgrades to insulation or other green features, you will need a home energy audit to verify the improvements are worth the effort. A HERS Audit is performed (approx $750 cost of which a portion is credited back in your EEM). Certified inspectors use techniques like infrared thermography and blower doors to test the energy efficiency of your home. These systems checks are part of LEED gold and BuiltGreen 4 star home certifications and are increasingly used by renovation specialists.

In some cases the product manufacturer can provide statistics of before and after savings to satisfy the underwriter's guidelines on yearly savings. Double or or triple pane windows and low-e glass are a no brainer in colder climates. One borrower installed a pellet stove to replace an older wood stove. The pellet stove manufacturer provided statistics comparing the savings of using a recycled easily sourced product and the heat btu gain plus dollar savings. Very convincing!

The bottom line is that your energy improvements must net dollar savings over time. Lenders appreciate that you will be paying less for energy going up in smoke, literally, and give you some credit toward a higher mortgage payment.

Who Can Help? Call your local Building Planning Department may refer professionals in the area. Contact your local chapter of American Institute of Architects or Building Designers. Seek out professionals in local building trades groups. City planners, universities and other business networks and sustainability groups may refer members who are experienced in these technologies. There's always Google!

Get a leg up on the renovation boom! Many folks are staying put and making lifestyle and health changes including improvements to their homes to allow aging in place...all good! Factoid: Most so called 'green loans' are a public relations ploy to get you in the door and the lender doesn't even know about EEM's and may not have a specialist construction department--borrower beware!

Get the Real Deal!
Your green project needs to realize more than good intentions. Invest in a designer or architect and builder who are certified under a green program. The two most recognized programs are: Built Green, rated by stars and LEED rated as silver, gold or platinum.

Built Green is run by our local BIA chapter: There are other programs in other regions.

LEED for Homes is managed by the US Green Building Council. this program was originally developed by commercial architects and has the most rigorous testing.

So remember the new mantra of our times: Green is Good!

Happy greening!

© 2009 susan templeton

Friday, May 29, 2009

PERFECT Time to Build Your Home!

What, are we crazy to suggest such a thing? Nope. Actually, like a good market contrarian, we can list a few very solid business reasons to build NOW.

1. Architects and Home Designers are either totally slammed working on major renovations for their top clients who may have decided to stay put or age in place... or extremely grateful for a nice plum ground up custom design to work on.
2. Builders are largely under-employed right now, so you will enjoy a choice of builders who are more willing negotiate your price and expect fantastic service.
3. Borrowers with high credit scores (720 or better) and sufficient assets to back up their project will have banks falling all over themselves to assist a custom project.
4. Builders can forget funding their own spec or custom homes (unless their client is taking on the financial risk) so you, Mr or Ms. Borrower will have all kinds of respect and control of your custom project coming your way.
5. Land values have plummeted due to the lack of developers able to fund construction projects so you will have more choice of lots going for rock bottom prices.
6. Materials costs are down for sheeting products, i.e., OSB board, plywood and other locally accessed products due to lesser demand.
7. Subcontractor labor costs are lower: $3.50 per square foot to frame a custom home now down from $6.50 psf last year (local source our region).
8. Green technologies are enjoying some very cool stimulus energy tax credits for solar and other alternative energy systems, so you can add some hot new upgrades to your home for great energy savings and better quality of life.
9. Energy efficient appliances are also enjoying local rebates from the appliance manufacturers as well as your local Public Utilities companies.
10. Better lighting design, including super efficient LED products are coming on the market that present huge energy and health benefits over current high efficiency models.

Whats not to like about all these advantages to building your home the way you want it for less $ per square foot? Just don't wait for the next wave of contrarians who can't find a nice spec home with all the perks of custom homes to get the message!

Happy custom building! 

© 2009 susan templeton

Wednesday, November 26, 2008

Green is UnGreed!

"The greed that led the world economy into crisis will not defeat our commitment to good work." Rick Fedrizzi

This quote came in a letter from the the CEO of the US Green Building Council, Rick Fedrizzi, offering the hope for homeowners and those in the green building industry who are concerned about the viability of our Green Movement during tough economic times. With everyone questioning the viability of the housing market in general, he reminds us that good is always valued. In fact, when you come right down to it, good equals value. We tend to choose better things that last longer and forego short term gratification when the dollars really matter.

He reminds us that we cannot wait for change to be effected by our legislators, our bankers, our employers or our mentors. It's up to us to create these positive changes for ourselves. By voting for officials we can support and then NOT just leaving it up to them but to get to work behind them and speak about, write about, blog about and take our need for positive change into the center of our real lives.

Change is hard. Not changing and waiting for things to get better is harder. We can create our own agenda, our own thinking, our own actions, as ultimately our abundance and our freedom!

Good ideas, and good trends eventually do take hold once proven. I posted a basic green blog on a real estate interactive site a while back and there were very few comments. Since then, I've helped initiate more discussion on these values in my circle of influence, attended several Green Living and Building Expos, taught a Green Mortgages workshop, participated in a Green Home Bus Tour, visited a couple of New Green Home and Renovation Open Houses, started foward planning for a Better Living (shades of green) seminar, and been party to a conversation on LEED and local Health Inititaves with my local officals and University. I have been speaking with more clients who are interested in building smaller better, greener homes. The conversation with banks (fewer, leaner) about ways to fund these projects is an open dialogue...we aren't there yet but with the 2009 Housing Bill I am pushing hard for updates to the traditional Energy Efficient Mortgage including air quality, more dollars and ways toincorporate the Alternative Energy Tax Credits. This trend is certainly catching fire and is NOT a trend we will see reversed any time soon (while there is breath in my body!)

Good news catches on for a reason: In recent months, I have witnessed a number of great new technologies and models coming to the fore. Given that the 2008 Congress Bailout Bill did include some tax credit extentions for solar and alternative energy --that very fact may help folks with their acceptance levels. Trends I have witnessed coming online locally include prefab modular home companies, new alternative energy products, new publications and networks supporting green concepts in various forms. The sheer enthusiasm for things green is contagious. It's gaining momentum. As better home and lifestyle trends become more the norm, these concepts are gaining acceptance with appraisers, realtors, underwriters, and lenders. Perhaps because green choices make both economic, social and environmental sense!

The upshot of all this for homeowners who are building or renovatiing and want to do a better job is more choice and more options with more willing participants. So remember the new mantra of our times: Green is Good!

Catch the wave! Loannetter

For more on green building